Infra projects remain muddled with delays

India’s patchy infrastructure is often cited as the main reason for the Indian economic growth trailing behind that of Chinese despite nearly two decades of liberalisation. One of the major reason for the dismal state of Indian infrastructure is unwarranted delays that most projects encounter.

According to government’s own estimates, more than 50% of the infrastructure projects currently being undertaken in the country are suffering from substantial delays. Data available with the ministry of statistics and programme implementation shows that 423 of the 925 projects going on at various parts of the nation have crossed their deadlines.

The delays in infra projects not only lead to slow development but also causes substantial burden on exchequer as the overhead costs and some times raw material costs too increase many times. According to government’s estimates, the delays in the 423 projects have resulted in additional costs of Rs 38,663 crore, over and above the planned costs.

Most of  the projects which face high delays are in power and roads sectors. For example, according to estimates, about 70% of the total contracts which were supposed to be awarded by the National Highways Authority of India (NHAI) last year never came on board, primarily because lack of coordination between the commission and the concerned ministry in UPA government’s last term.

However, delays are not always administrative and there are some structural issues as well. For instance, in case of power sector, the delay in projects is often due to much lower manufacturing capacity in electrical equipments compared to the ambitious power generation capacity expansion plans.

In this wake, if the government is to meet its target of raising investment rate in infrastructure to 9% by 2014, as mentioned in the Budget for 2009-10, the cabinet committee on infrastructure headed by the Prime Minister himself will have to bring overhauling changes in the way India implements its infra plans